President Donald Trump believes Jerome Powell is standing in his way. He has repeatedly threatened to fire him, but there is no clear legal path to make that happen. Last week, however, the Supreme Court left the door slightly ajar.
Trump on Thursday again made clear that Powell is in his crosshairs. “Powell’s termination cannot come fast enough!” he said on his Truth social media channel, giving the Fed chairman a new nickname: “Too late”. That message also sparked questions at the press conference of ECB chair Christine Lagarde, who defended Powell and said a country that does not respect the independence of its central bank would never be allowed to join the eurozone.
America’s Chief Justice, John Roberts, ruled last week that Trump can, for now, proceed with the dismissal of two top officials. That approach may also be applied to Powell. A federal judge had previously blocked the move. The officials in question are Gwynne Wilcox and Cathy Harris, from the National Labor Relations Board and the Merit Systems Protection Board, respectively. Attorney General John Sauer, who must defend Trump’s decision, stated that the two are “clearly at odds with the administration’s policy.” No further explanation was given.
While it may seem like a technicality in today’s political discourse, legal experts warn that the outcome of this case could reverberate all the way to the Federal Reserve’s boardroom. “If those officials can be removed simply because the president wants them gone, then Powell could also be in the danger zone,” said Kenneth Manusama, an expert on American constitutional law.
“This administration is known for testing the boundaries of the law and pushing against established norms,” Manusama added. The most recent example came on Monday, when Trump announced he would not comply with a unanimous Supreme Court ruling requiring the return of a wrongly deported immigrant from El Salvador to the United States.
Humphrey’s executor
The case involving the two officials remains under close scrutiny by the Supreme Court. The justices issued an “administrative stay,” a temporary measure allowing the full court time to consider the issue.
At the heart of the matter is an almost ninety-year-old precedent: Humphrey’s Executor. In 1935, the Supreme Court ruled that President Franklin Roosevelt could not fire a member of the Federal Trade Commission for political reasons. Since then, independent government agencies have only been allowed to lose their top officials under strict conditions—such as gross misconduct or mismanagement.
Now, for the first time, the US Department of Justice is explicitly arguing not only that Humphrey’s Executor was wrongly decided, but that it should be overturned entirely.
“If Humphrey’s Executor falls, there’s a strong chance the independence of the United States’ central bank will go with it,” said Peter Conti-Brown, Associate Professor of Financial Regulation at the University of Pennsylvania and author of The Power and Independence of the Federal Reserve.
According to him, Jerome Powell would likely have been dismissed in 2019 if not for Humphrey’s Executor, and replaced with someone “whose monetary views aligned more closely with President Trump’s.”
“There’s no need to speculate about the consequences for American prosperity in a world where the Federal Reserve loses its independence. One of the most well-documented empirical facts of the late twentieth and early twenty-first centuries is that central banks protected from immediate dismissal decisions are better able to preserve the value of their currency than those that are not.”
Conti-Brown, concerned about the possibility that the Supreme Court may overturn the 1935 ruling, has filed an amicus brief—a legal document submitted by individuals or organizations that are not parties to a case but have a strong interest in its outcome.
“Cut interest rates, Jerome”
Powell’s current term runs until May 2026. Only if the Supreme Court strikes down the old precedent would Trump gain more legal room to replace him early. That would be welcome news for Trump, who has long been frustrated by the Fed’s high interest rate policy.
He rarely misses a chance to say so. Shortly after his self-declared “Liberation Day”—his chosen name for the day he announced new import tariffs—Trump once again took to his platform Truth Social to lash out at Powell: “CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
During his previous presidency—when he himself appointed Powell—Trump had already accused the Fed Chair of sabotage. Powell stood firm then, and continues to do so now. Interest rates remain between 4.25 and 4.5 percent. Too high, according to Trump and his advisors, who argue there’s room for a cut of 100 basis points. Markets now appear to share that expectation.
But as long as inflation remains above the 2 percent target, the Fed remains cautious. No rash moves, no bending to political pressure—that’s the message from Washington.
The Fed as the “elephant in the room”
And that’s where the tension lies. If the Supreme Court overturns the protections established by Humphrey’s Executor, one of the last institutional barriers between the White House and the Fed would disappear.
According to Stephen Vladeck, Professor of Constitutional Law at Georgetown University, the Court is proceeding cautiously—not necessarily because of Powell, but because of the bigger picture. “The Fed is the elephant in the room,” he said. “There’s a widely shared understanding that its independence is essential.”
But, he added, “No one has yet provided a compelling legal argument for why the Fed should remain protected while other agencies are not.” Powell’s formal independence, in other words, offers no guarantee.
“The administration may still find a way to push him aside,” Manusama warned.